During its Investor Day on 17 November 2025, Yum China (9987 HK/TP: HK$428.00; YUMC US/TP: US$54.90, BUY)’s management reviewed Company’s growth journey over the past decades, and unveiled a series of quite ambitious operational/ financial goals. Overall, YUMC is poised to implement a much more balanced RGM3.0 strategy (i.e. simultaneously focusing on three pillars, namely Resilience, Growth, and Moat), based upon relentless innovation capabilities and strengthening organisational efficiency. The highlights are as follows.
Market potential. Management reiterates the unparalleled opportunities in China – on a purchasing power parity-adjusted basis, China has the largest consumer market (i.e. 1.6x of the US market in 2024), and in China, chain restaurant revenue share in foodservice is still low (i.e. 20% in 2024, vs. 59% in the US), according to Euromonitor. Dine-out frequency may rise from 3.5 times in 2023 to 5.5 times in 2030, on a weekly basis, according to Meituan. YUMC expects to increase its tapped customer base from today’s 1/3 to 1/2 (of Chinese population underserved) in the coming years. Cities & towns with YUMC presence in China is also projected to increase from 2,500+ by 3Q25 to 4,500+ by 2030.
Accelerating store opening. YUMC has 17,000 self-operated/ franchised stores in China, mainly under KFC and Pizza Hut (“PH”) brands. Management looks for 20,000/ 25,000/30,000 stores in total by 2026/2028/2030, respectively. Specifically, KFC and PH could have over 17,000 and 6,000 stores, up 35% and 50% from now, respectively, by 2028. Remarkably, management estimates that franchised stores may account for over 20% of total store count under KFC and PH by 2028 from 13% by 2025. Lavazza will speed up store network expansion (esp. in Tier-1, new Tier-1 & some Tier-2 cities in China), likely reaching over 1,000 stores by 2029, and may achieve an annual retail sales of US$60m at that time.
Same-store performance driven by agile business model. Despite continuous store network densification, management is confident that YUMC’s overall same-store YoY growth should stay at 0%-2% in 2026-28. Feedbacks on PH WOW look positive. In order to attract new customers in new occasions, management develops three new formats, namely side-by-side “KFC + K Coffee + KPRO”, small-town KFC, and Gemini model (i.e. “KFC & PH”), which would create competitive edge esp. in unlocking white space.
Financial guidance. Management expects to double YUMC’s operating profit in 2029 vs. 2024, with a HSD% CAGR in 2026-28. In terms of restaurant margin, PH will turn stronger, while KFC is likely to stay stable, vs. 2025 level. Management expect FCF to exceed US$1.1bn from 2028 onwards, which could be seen as a solid guarantee for further shareholder return.
Our take. We like the Company’s current RGM3.0 strategy and its proven execution excellence. Guidance for the next few years now seems encouraging and clearer. We reckon short-term uncertainty still exists in a fluid macro environment. However, due to a huge market potential and the Company’s superior store UE model at least for its core brands, we are optimistic that the long-term goals are achievable. Our rating is BUY, with TP at HK$428.00/US$54.90 for YUMC-H/-US implying 19x 26E P/E.